Landlords have many issues to consider as they manage their property portfolio, and the entire process can become extremely overwhelming over time. One of the most pressing concerns is provided by empty properties, as these entities represent lost revenue and can cost a considerable sum to maintain until they are leased. This is the primary reason why the majority of landlords do not insist that their potential tenants purchase renters insurance, as this may deter individuals from committing to a specific property or lease agreement.
The Importance of Renters Insurance for Landlords
This is a flawed philosophy, however, and one that can ultimately cost you significant sums of money as a landlord. Consider the following reasons why you should make renters insurance a key requirement of your tenants:
- The Gap Between Renters and Building Insurance: Not only do landlords ignore renters insurance in the quest to entice tenants, but they also do so in the mistaken belief that their building coverage will provide adequate protection. This ignores the subtle differences between the two types of insurance, as standard building coverage does not protect against the conduct of tenants or any damage that may be incurred to their material possessions. Failing to recognize this can trigger significant future costs and ultimately undermine any relationship that you forge with your tenants.
- The Mindset of Tenants in the Case of an Accident: The relationship that you have with your tenants is likely to be changeable, especially in instances where there has been an accident or damage caused to their possessions. If your tenants decide to use basement space for storage and are not required to buy renters insurance, for example, they will often look for you to cover their losses in the event of water damage. This can cause a breakdown in the relationship and ultimately trigger a legal dispute, simply because the lack of renters insurance creates significant gaps in coverage levels.
- The Compensation Culture in America: On a similar note, it is hard to escape the fact that instances where lawsuits are filed against landlords are commonplace. While this may be a typical risk associated with property owners, it is worth remembering that it is not always tenants who choose to take legal action. If your tenants do not have renters insurance, any accidents or incidents that take place within your property are your responsibility as a landlord. So should a visitor be bitten by a tenants dog or injured in a fracas, they will be forced to turn to the owner of the property in order to secure compensation. By requiring your tenants to purchase renters insurance with a minimum liability coverage, however, this issue can be easily negated.
The Bottom Line
In the current economic climate, it is all too easy to become preoccupied with short term financial gains. While the cost of an empty property may be concerning for landlords, however, this pales into insignificance when you consider the potential implications of housing tenants who do not hold adequate renters insurance. In order to avoid these issues, be sure to adopt a long term outlook and make renters insurance a firm requirement.
About the Author: Lori Robinson is a senior writer and publicist for Monkey Insurance, a leading car insurance quote site. Monkey goes the extra mile with the mantra “Savings that Matter” to ensure a reliable and honest insurance quote.